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Bank of England Expands Asset Purchase Program

July 5, 2012 at 11:31 by Vladimir Vyun

A fan of 20-pound billsToday, the Great Britain pound rose against the euro, fell against the Japanese yen and was flat versus the US dollar after the Bank of England expanded its stimulating program.

The BoE kept its main interest rate at 0.5 percent and expanded size of its asset purchase program by £50 billion to a total of £375 billion. The bank explained its decision:

Against the background of continuing tight credit conditions and fiscal consolidation, the increased drag from the heightened tensions within the euro area meant that, without additional monetary stimulus, it was more likely than not that inflation would undershoot the target in the medium term.

The expansion was expected as UK economic indicators were subdued for rather long period of time. Yet quite of few analysts were disappointed by the size of stimulus as they expected a bigger increase of quantitative easing.

GBP/USD was flat at 1.5588 as of 11:31 GMT today. GBP/JPY fell from 124.48 to 124.15. EUR/GBP was down from 0.8029 to 0.8024.

If you have any questions, comments or opinions regarding the Great Britain Pound, feel free to post them using the commentary form below.

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